NARAYANA CHETTY Y Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE are applications under Article 226 of the Constitution for the issue of writs of prohibition or other appropriate writs to restrain the Income-tax Officer from enforcing the orders of assessment passed under Section 34 of the Income-tax Act, with reference to the assessment years 1943-44 and 1944-45.

(2.) THE facts that led up to the Institution of these applications cannot be in dispute. B. Audayya and C. Pitchsyya carried on trade in textiles. THEre were three firms. THE first firm was known as Audayya and Pitchayya. THEre was a registered deed of partnership dated 20-4-1936, and the partners purported to dissolve the partnership on 31-3-1948. THE second firm was known as C. Pitchayya and Co., and purported to consist of C. Pitchayya and one R. Subba Rao. THE deed of partnership between the two was dated 30-7-1941, and the partnership was dissolved on 31-3-1949. THE third firm was known as Pra-bhat Textiles. That partnership purported to include seven persons including B. Audayya and C. Pitchayya. THE deed of partnership was dated 1-12-1941. THE partnership was dissolved by a decree of Court dated 22-12-1949, but with effect from 1-1-1949.

(3.) THE learned counsel for the petitioners put forward three points for our consideration: (1) That the proceedings under Section 34 against each of these three firms were without jurisdiction. (2) That the cancellation of registration of each of the three firms was without jurisdiction, as rule 6-B was 'ultra vires' the Central Board of Revenue, which promulgated the rules under the powers conferred on it by the Act, and (3) That it was illegal to assess escaped income under Section 34 on an unregistered firm, while the original assessment for the assessment years 1943-44 and 1944-45, which still stood, was on the basis that the firms were registered under Section 26-A of the Income-tax Act.